SHP-1 is a protein tyrosine phosphatase expressed predominantly in hematopoietic cells where it has been linked to negative regulation of signaling events induced by cytokines, growth factors and antigens. Mutations in the SHP-1 gene in mice cause the motheaten (me/me) phenotype. Mice homozygous for the me allele, which results in the absence of any detectable SHP-1 protein, display a variety of disorders in all hematopoietic lineages resulting in death about two to three weeks after birth. These mice provide a valuable tool to combine in vitro biochemical assays with in vivo and ex vivo biological studies. Our long term goal is to understand how SHP-1 influences the growth and differentiation of hematopoietic cells. This proposal will attempt to elucidate the involvement of SHP-1 in immature, mature and regulatory T cell development and function using a combination of biological and biochemical approaches. We have shown that a subpopulation of SHP-1 localizes to lipid rafts and that this localization is functionally relevant for TCR signaling. However, the mode of targeting SHP-1 is not known. The goal of Aim 1 is to determine the molecular mechanism driving lipid rafts localization of SHP-1 and the functional implications of lipid rafts localization: Our preliminary studies suggest that mice deficient in SHP-1 show increased numbers of CD4+CD25+ regulatory T cells in the thymus and spleen. In Aim 2, we propose to test the hypothesis that SHP-1 affects the function of CD4+CD25+ Treg cells. We will examine the strength and duration of the suppressive potential of SHP-1-deficient Treg cells using in vitro and in vivo assays, the role of SHP-1 in intracellular signaling of Treg cells. In Aim 3, we will test the T cell intrinsic requirement for SHP-1, and the role of other hematopoietic lineages deficient in SHP-1 activity on the generation/expansion of a regulatory T cell population. We will use mice carrying transgenes for inducible and tissue-specific expression of dominant negative SHP-1 mutants to address these questions. Taken together, the studies proposed here should give us a better understanding of the SHP-1 and TCR signaling. In addition, we expect to gain a better understanding of factors that influence the development and function of CD4+CD25+ Treg cells with a focus on the role of SHP-1 during these processes.